Question
Question No.01 The combined balance sheet accounts of Lever Brothers are presented below. Lever brothers. Comparative balance sheet accounts As of December 31st , 2018
Question No.01 The combined balance sheet accounts of Lever Brothers are presented below. Lever brothers. Comparative balance sheet accounts As of December 31st , 2018 and 2017 2018 2017 ASSETS Rs. Rs. Cash 42,000 33,750 Account Receivable 70,500 60,000 Inventory 30,000 24,000 Investments(available for sale) 22,250 38,500 Machinery 30,000 18750 Building 67,500 56250 Land 7,500 7,500 269,750 238,750 LIABILITIES Rs. Rs. Allowances for doubtful accounts 2,250 1,500 Accumulated depreciation-Machinery 5,625 2,250 Accumulated depreciation-Building 13,500 9,000 Accounts Payable 35,000 24,750 Accrued Payable 3,375 2,625 Long term Notes payable 21,000 31,000 Common stock, no-par 150,000 125,000 Retained Earnings 39,000 42,625 269,750 238,750 Additional data (ignoring taxes): 1. Net income for the year was Rs.42,500. 2. Cash dividends declared and paid during the year were Rs.21,125. 3. A 20% stock dividend was declared during the year. Rs.25,000 of retained earnings was capitalized. 4. Investments that cost Rs.25,000 were sold during the year for Rs.28,750. 5. Machinery that cost Rs.3,750, on which Rs.750 of depreciation had accumulated, was sold for Rs.2,200. Lever Brothers Income Statement For the year ended 2018 Rs. Sales Revenue 540,000 Less: Cost of goods sold 380,000 Gross margin 160,000 Less: Operating expenses (includes Rs.8,625 depreciation and Rs.5,400 bad debts) 120,450 Income from operations 39,550 Other: Gain on sale of investment 3,750 Loss on sale of machinery (800) 2,950 Net Income 42,500 Instructions (a) Compute net cash flow from operating activities using the direct method. 10-Marks (b) Prepare a statement of cash flows using the indirect method. 10-Marks
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